TMI Blog2021 (10) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... :- We notice that the Ld CIT(A) has decided this issue following the binding decision of Hon ble jurisdictional Karnataka High Court. Hence we do not find any reason to interfere with his decision rendered on this issue. - ITA Nos. 1096 And 1097/Bang/2019 - - - Dated:- 12-10-2021 - Shri George George K., Judicial Member And Shri B.R. Baskaran, Accountant Member For the Appellant : Shri K. Sankar Ganesh, D.R. For the Respondent : Shri V. Srinivasan, A.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: Both the appeals filed by the revenue are directed against the orders passed by Ld. CIT(A)-1, Benglauru and they relate to the assessment years 2013-14 2014-15. Both the appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. The common issue urged in both the years by the revenue relate to the quantum of deduction allowed u/s 80IA of the Income-tax Act,1961 ['the Act' for short]. In assessment year 2014-15, the revenue has raised one more issue, i.e, the revenue challenged the relief granted by Ld. CIT(A) in respect of addition made u/s 14A of the Act. 3. We shall first take up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 7. Before Ld. CIT(A), the assessee contended that the decision rendered by Hon ble Supreme Court in the case of Liberty India (supra) was on a different issue i.e. where the amount received by way of duty drawback is eligible for deduction u/s 80IA of the Act or not. Hence the said decision is not applicable to the facts of the present case. The assessee submitted that, in the instant case, the issue related to the manner of computation of deduction u/s 80IA of the Act. By placing reliance on following decisions, the assessee submitted that deduction u/s 80IA of the Act is allowed on the profits of eligible unit and the loss incurred in other units should not be adjusted for determining the quantum of deduction eligible u/s 80IA of the Act. It was further deduction so claimed by the assessee does not exceed gross total income: a) Jindal Aluminium Ltd. (IT appeal No.1021/Bang/2011 b) Canara Work Shops Pvt. Ltd. (1986) 27 Taxman 262. c) Dewan Kraft System Pvt. Ltd. (IT appeal No.977/2005 186/2006 dated 27.2.2007) (Del). 8. The Ld. CIT(A) was convinced with the contentions of the assessee and accordingly deleted the disallowance made by th A.O. wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g profits from Kalamb unit and losses from Delhi unit and claimed deduction under section 80-IA of certain amount being 100 per cent profit derived from Kalamb unit Assessing Officer adjusted loss of Delhi unit against profit of Kalamb unit and restricted deduction to said amount - Whether in view of section 80- 1A(7), Kalamb unit, being only unit of assessee eligible for deduction under section 80-IA,. was to be treated as an independent unit and same had to be treated as only source of income for assessee for purpose of computing deduction under section 80-IA and, therefore, Assessing Officer was not justified in restricting deduction - Held, yes [2017] 85 taxmann.com 134 (SC) SUPREME COURT OF INDIA Makino India (P.) Ltd CIVIL APPEAL NO. 1062 OF 2017 APRIL 3, 2017 'Section 10A of the Income-tax Act, 1961 - Free trade zone (Computation of deduction) - Whether in view of judgment in CIT v. Yokogawa India Ltd. [20171 391 ITR 274/244 Taxman 273/77 taxmann.com 41 (SC), after amendment of section 10A by Finance Act, 2000 with effect from 1-4-2001, said section has become a provision for deduction but stage of deduction would be while computing gross total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the maximum amount of deduction should be restricted to ₹ 397.36 crores (the amount of Gross Total income) and not 355.74 crores, since the eligible amount of deduction was higher than the gross total income. The Ld CIT(A), Tribunal and High Court accepted the claim of the assessee. Hence the revenue filed appeal before Hon ble Supreme Court. The Hon ble Apex Court upheld the view of the High Court and dismissed the appeal of the revenue. Relevant observations made by the Hon ble Supreme Court are extracted below:- 12. The import of Section 80-IA is that the total income of an assessee is computed by taking into account the allowable deduction of the profits and gains derived from the eligible business . With respect to the facts of this Appeal, there is no dispute that the deduction quantified under Section 80- IA is ₹ 492,78,60,973/-. To make it clear, the said amount represents the net profit made by the Assessee from the eligible business covered under sub-section (4), i.e., from the Assessee s business unit involved in generation of power. The claim of the Assessee is that in computing its total income , deductions available to it have to be set-off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid amount represents income from the eligible business under Section 80-IA and is the only source of income for the purposes of computing deduction under Section 80-IA. The question that arises further with reference to allowing the deduction so computed to arrive at the total income of the Assessee cannot be determined by resorting to interpretation of subsection (5). 14. It will be useful to refer to the judgment of this Court relied upon by the Revenue as well as the Assessee. In Synco Industries (supra), this Court was concerned with Section 80-I of the Act. Section 80-I(6), which is in pari materia to Section 80-IA(5), is as follows: 80-I(6) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an industrial undertaking or a ship or the business of a hotel or the business of repairs to ocean-going vessels or other powered craft to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under subsection (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has a bearing on the interpretation of sub-section (1) of Section 80-IA of the Act. We hold that the scope of sub-section (5) of Section 80- IA of the Act is limited to determination of quantum of deduction under sub-section (1) of Section 80-IA of the Act by treating eligible business as the only source of income . Sub-section (5) cannot be pressed into service for reading a limitation of the deduction under sub-section (1) only to business income . An attempt was made by the learned Senior Counsel for the Revenue to rely on the phrase derived from in Section 80-IA (1) of the Act in respect of his submission that the intention of the legislature was to give the narrowest possible construction to deduction admissible under this subsection. It is not necessary for us to deal with this submission in view of the findings recorded above. For the aforementioned reasons, the Appeal is dismissed qua the issue of the extent of deduction under Section 80-IA of the Act. 10. The Hon ble Supreme Court held that there is no limitation on deduction admissible under Section 80-IA of the Act to income under the head business only. Hence the view expressed by the AO in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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